This ETF Could Boost Any Retirement Account | Economic news


Almost all of us need to save and invest for our retirements, because social security, while essential, will not support us well on its own. The recent average monthly Social Security retirement benefit was $1,665, or about $20,000 a year.

Unfortunately, many, if not most, of us are behind in our savings and investments. According to the 2021 Retirement Confidence Survey, only 72% of workers surveyed said they had saved anything for retirement, and many had saved far less than they should have to meet their retirement goals. . However, it is not too late to do better.

Image source: Getty Images.

Here’s a simple investing strategy that can help you build wealth for your future, plus a exchange-traded fund (ETF) which can boost the strategy.

A simple and basic strategy

It’s a shame that many people delay or avoid investing because it seems complicated and daunting. It is not obligated. You don’t have to read a dozen investing books or spend hours a week studying stocks, deciding which to buy or sell.

Instead, you can just park most or all of your long-term money (dollars you won’t need for at least five or even 10 years) in one or more low-cost broad index funds. Each index fund aims to provide roughly the same return as the index it tracks, less fees. Here are three solid ones to consider:

  • SPDR S&P 500 ETF (NYSEMKT: SPY)
  • Vanguard Total Stock Market ETFs (NYSEMKT: VTI)
  • Vanguard Total World Stock ETF (NYSEMKT:VT)

Respectively, these investments will instantly invest your money in approximately 80% of the US stock market, the entire US stock market, or pretty much the entire global stock market. Put money into one or more of them (or other good index funds) regularly, and over many years your wealth should grow.

During your particular investment period, the stock market might get average annual returns of, say, 7% or maybe 12%. There’s no way to know. Over very long periods, it has nearly 10% on average annually. The chart below is a bit conservative, reflecting 8% annual growth, and it shows how much you could accumulate over time just with index funds:

8% growth for…

$10,000 invested annually

$15,000 invested annually

$20,000 invested annually

5 years

$63,359

$95,039

$126,718

10 years

$156,455

$234,683

$312,910

15 years old

$293,243

$439,865

$586,486

20 years

$494,229

$741,344

$988,458

25 years

$789,544

$1,184,316

$1,579,088

30 years

$1,223,459

$1,835,189

$2,446,918

Data source: Author’s calculations.

Boost your investment strategy

That’s pretty impressive growth. However, you may want to aim for faster growth. If so, consider parking some of your cash in the Invesco QQQ Trust (NASDAQ: QQQ). It is an ETF made up of the 100 largest non-financial companies listed on the Nasdaq stock market (measured by market capitalization).

It’s not guaranteed to outperform the broader US stock market, but its track record is pretty good:

Average annual return on…

Invesco QQQ Trust

5 years

20.6%

10 years

18.5%

15 years old

15%

Source: Morningstar.comto April 22, 2022.

If you look at his top 10 recent holdings, you’ll get an idea of ​​how he was able to generate such returns:

Company

Allocation

Apple

12.67%

Microsoft

9.97%

Amazon.co.uk

7.28%

You’re here

4.69%

Alphabet (Class C shares)

3.76%

Alphabet (Class A shares)

3.58%

Nvidia

3.51%

Metaplatforms

3.22%

Costco

2.06%

Broadcom

1.89%

Source: Invesco.com.

The fund also has around 90 other holdings, including many well-known companies, such as:

  • Intel
  • Amgen
  • netflix
  • PayPal
  • Adobe
  • Starbucks
  • Airbnb
  • Intuitive surgery
  • Focus on video communications
  • Lululemon Athletica

So think about these investment strategies, especially if you need to do better than what you were doing before. The first alone, a simple index fund or two, that might be enough for you – and if you want to aim higher, consider putting some money into the QQQ ETF. Don’t leave your future financial security to chance and don’t assume that Social Security will suffice.

The $18,984 Social Security premium that most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help boost your retirement income. For example: an easy trick could earn you up to $18,984 more…every year! Once you learn how to maximize your Social Security benefits, we believe you can retire confidently with the peace of mind we all seek. Just click here to find out how to learn more about these strategies.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Selena Maranjian owns Alphabet (A shares), Alphabet (C shares), Amazon, Amgen, Apple, Costco Wholesale, Intuitive Surgical, Meta Platforms, Inc., Microsoft, Netflix, PayPal Holdings and Starbucks. The Motley Fool owns and endorses Adobe Inc., Airbnb, Inc., Alphabet (A-shares), Alphabet (C-shares), Amazon, Apple, Costco Wholesale, Intel, Intuitive Surgical, Lululemon Athletica, Meta Platforms, Inc., Microsoft, Netflix, Nvidia, PayPal Holdings, Starbucks, Tesla, Vanguard Total Stock Market ETF and Zoom Video Communications. The Motley Fool recommends Amgen and Broadcom Ltd and recommends the following options: January 2023 long calls at $57.50 on Intel, March 2023 long calls at $120 on Apple, $100 April 2022 short calls on Starbucks, short January 2023 calls $57.50 on Intel and short March 2023 calls $130 calls on Apple. The Motley Fool has a disclosure policy.


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